Remittances and Financial Access: Is There Really a Link and for Whom? Evidence from Mexican Household Data

Abstract

In policy discussions, it has frequently been claimed that migrants' remittances could function as a ‘catalyst’ for financial access among receiving households. This paper provides empirical evidence on this hypothesis from Mexico, a major receiver of remittances worldwide. Using the Mexican Family Life Survey panel (MxFLS) for 2002 and 2005, the results from the fixed effects logit model show that receiving remittances is strongly correlated with the ownership of savings accounts and to a limited degree with the availability of borrowing options. Effects are particularly important for microfinance institutions, and more important for rural households compared to urban households.

Why do migrants remit?

“…Remittances towards developed countries are not the primary interest of this paper; instead, the main incentives of remitting money to all countries and developing countries are explored. During recent years, different aspects of remittances towards developing countries have been under scrutiny of researchers, such as the growth impact of remittance (Barajas, Chami, Fullenkamp, Gapen, & Montiel, ; Giuliano & Ruiz‐Arranz, ; Rao & Hassan, ); the impact of remittances on poverty and inequality (Adams & Page, ; Acosta, Calderon, Fajnzylber, & Lopez, ); the impact of remittances on financial development (Aggarwal, Demirg‐Kunt, & Peria, ; Brown, Carmignani, & Fayad, ); the impact of remittances on current account (Hassan & Holmes, ); remittances and business ownership (Amuedo‐Dorantes & Pozo, ); remittances and financial access (Ambrosius, ); and the impact of education and gender on remittances (Cooray, ; Le Goff & Salomone, ). However, this paper focuses on the main determinants of remittances and more specifically the motivations behind remittances.…”

The Role of International Mobile Remittances in Promoting Financial Inclusion and Development

“…As highlighted by Ambrosius (2015), Aggarwal et al (2011), Demirguc-Kunt et al (2011), Anzoategui et al (2011) the link between remittances and access to financial services by the recipients of remittances has received limited attention in academic literature. Of the studies that have been conducted in order to investigate the association between remittances and access to financial services, the apparent majority of these studies have found evidence of a positive relationship (Ambrosius and Cuecuecha, 2016;Ambrosius, 2015;Anzoategui et al, 2011;Aggarwal et al, 2011;Demirguc-Kunt et al, 2011;Gupta et al, 2009).…”

“…Of the studies that have been conducted in order to investigate the association between remittances and access to financial services, the apparent majority of these studies have found evidence of a positive relationship (Ambrosius and Cuecuecha, 2016;Ambrosius, 2015;Anzoategui et al, 2011;Aggarwal et al, 2011;Demirguc-Kunt et al, 2011;Gupta et al, 2009). However, an outlying study by Brown et al (2013) did not find any evidence to support the claims of a positive relationship between remittances and the receiving households' use of formal banking services.…”

“…Instead, informal sources were more willing to lend against remittances while formal institutions were apparently limiting the services they provide to savings accounts only. Ambrosius (2015) used data from the Mexican Family Life Survey (MxFLS) in order to investigate the association between remittances and access to and usage of financial services. The MxFLS was an individual and household level panel data set that was representative of the national population.…”

Remittances, ICT and Pension Income Coverage: The International Evidence

“…First, we extend and complement the literature on remittances-inclusive finance nexus by presenting for the first time, a cross-country evidence of the relationship between remittances and inclusive finance from the perspective of pension. Prior studies typically focus on access to banking services in the definition of inclusive finance (Ambrosius, 2016;Ambrosius and Cuecuecha, 2016;Le, Chuc and Taghizadeh-Hesary, 2019;Neaime and Gaysset, 2018). Additionally, whereas most studies focused on single country analysis (Cuadros-Meñaca, 2020; La and Xu, 2017), we study a panel of 96 countries from five regions, namely: (1) Africa, (2) Asia-Pacific, (3) Eastern Europe, (4) Latin America, and 5Western Europe and Others.…”